Credit Agricole SA · EURONEXT:ACA
Credit Agricole SA — Emporiki Bank — Investor Presentation (October 2009)
45 slides from Credit Agricole SA's investor presentation, Oct 7, 2009
Slide 1: Emporiki Restructuring & Development Plan
Emporiki Restructuring & Development Plan Analyst presentation October 7th, 2009
Slide 2: Disclaimer
DISCLAIMER This presentation includes forward-looking statements based on current beliefs and expectations about future events. Forward-looking statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respec
Slide 3: Executive summary (1/2)
Executive summary (1/2) • A strong historical player in the high potential Greek market, Emporiki will leverage its integration in an international Group to become the privileged long-standing partner of its clients. • Emporiki Bank intends to return to profit by the end of 2011, and by 2013 to be f
Slide 4: Executive summary (2/2)
Executive summary (2/2) • The domestic product subsidiaries of Emporiki Bank in which Crédit Agricole Group already hold stakes, will in 2009 be folded into the Group’s business lines. • Emporiki will endeavor to stabilize its international subsidiaries in the Balkans and in Cyprus, severely hit by
Slide 5: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 5
Slide 6: Emporiki bank, a strong historical player in Greece
Emporiki bank, a strong historical player in Greece A strong player in the Greek A positive brand well rooted in the banking sector Greek society Emporiki brand image, as % of respondents 80% 67% • Created in 1908 60 58% 47% • Among the top 5 players in Greece 40 • 10% share of points of sale in Gre
Slide 7: Emporiki has a strong established footprint in Greece
Emporiki has a strong established footprint in Greece Emporiki Bank Retail network • Greek population of 11.2M with high concentration in Attica and 47 Thessaloniki Thessaloniki - 3.8M in Attica region 34 - 1.1M in Thessaloniki region 9 17 1 19 5 • National coverage of Emporiki Bank 20 in Greece wit
Slide 8: The sole major Greek bank fully integrated in an international Group
The sole major Greek bank fully integrated in an international Group An integrated Business model for An increased involvement in international Retail network Emporiki capital since 2006 • European leader of Retail Banking • 2000: Crédit Agricole S.A. takes a 6.7% share • Presence in 74 countries in
Slide 9: The new logo symbolizes closer integration in Crédit Agricole Group
The new logo symbolizes closer integration in Crédit Agricole Group 9
Slide 10: Our Vision for Emporiki Clients
Our Vision for Emporiki Clients Strong historical player Integration to an international in the high potential Group with specialized product Greek banking market factories Emporiki will leverage its strengths for its future development • Retail: Strengthen presence, leveraging Crédit Agricole S.A.
Slide 11: Our Vision for Emporiki Employees
Our Vision for Emporiki Employees The alignment of the Human Capital with The streamlining of the HR processes the Restructuring and Development plan aims at making our people feel… is geared to… • Activate and Utilize the full potential of our • Motivated to “go the extra mile” people • Confident t
Slide 12: Emporiki strategic plan: Restore profitability by 2011
Emporiki strategic plan: Restore profitability by 2011 and build foundations for future success Restored profitability 2009 2010 2011 2012 2013 Recovery Risk monitoring and containment Reduction of operational costs Consolidation & Short term revenue boost Commercial acceleration Re-foundation More
Slide 13: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 13
Slide 14: Strongly reduce cost of risk
Risk Strongly reduce cost of risk Strategy Current situation Key strategic orientations 2011 milestones • Deterioration of credit 1 • Stabilized doubtful level portfolio in economic environment turmoil Reinforce credit granting with (Doubtful rate of 15% end centralization and new adapted • Cost of
Slide 15: Credit granting reinforced through centralization and new scorecards
1 Credit granting is being reinforced through centralization Risk Strategy and new adapted scorecards Mortgages centralization: Levers to put credit granting under control Encouraging first impacts • Building scorecards for credit approval on Payment delay (>90 dpd*) on 2 populations of mortgage pro
Slide 16: Closer monitoring of risk and boost of recovery performance
2 Closer monitoring of risk and boost of recovery Risk Strategy performance will accelerate cost of risk decrease Close monitoring of risk Industrialization of loans recovery • Implementation of tools and processes to • Integrated action plan in order to monitor customer risk profile reinforce proce
Slide 17: Emporiki Bank – Cost of Risk
Risk Emporiki Bank – Cost of Risk Strategy Comments Emporiki bank solo Cost of Risk • H1 2009 cost of risk of €344M; 2009 and €800M 2010 cost of risk is expected at high CAGR level, with a peak in 2009, due to impact ‘08-‘13 of economy crisis on existing loans -10% CAGR portfolio 600 ‘08-‘11 -20% 48
Slide 18: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 18
Slide 19: Streamline cost base
Cost Streamline cost base Strategy Current situation Key strategic orientations 2011 milestones • Overstaffed with 1 • -1500 FTE gross reduction unbalanced staffing by 2011 (1100 net) driven - NBI/FTE of €124K in ‘08 Reduce and rebalance staff by retirements and vs. 210-220 for top tier towards comm
Slide 20: Continued reduction of staff with rebalance towards commercial activities
1 Cost base: Continued reduction of staff with Cost Strategy rebalance towards commercial activities Staff evolution How we will achieve it Number of employees (end of year) • Reduce staffing needs both in Network and 7,000 Headquarters through reinforced 6,280 rationalization measures 5,500 - Branc
Slide 21: G&A Expenses: Levers for cost savings
2 G&A Expenses: Levers for cost savings have already Cost Strategy been initiated in 2009 G&A evolution Levers for 2011 target savings • A Strict monitoring of recurrent G&A -€30M G&A - IFRS – Quantity reduction: Reduce €200M marketing events, supplies savings… 188 178 27 Transformation – Procuremen
Slide 22: Several on-going initiatives to optimize Real Estate
3 Real Estate: Several on-going initiatives Cost Strategy to optimize Real Estate Rationale Expected benefits A Sale & rent of needed surface • Optimization of management of real estate properties • Recurring savings on • Optimization of surface rents but offset by and lease renegotiation additional
Slide 23: Emporiki Bank – Operational Expenses
Cost Emporiki Bank – Operational Expenses Strategy Comments Emporiki bank solo OPEX CAGR • Around €150M allocated to Emporiki ‘08-‘13 €800M transformation plan in 3 years CAGR -2% - Offsetting partially cost reduction in the ‘08-‘11 medium term -3% 597 595 600 550 550 • Savings measures to deliver f
Slide 24: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 24
Slide 25: Restore commercial performance: Retail
Retail Strategy Restore commercial performance Retail: Individuals and Small Businesses & Professionals Current situation Key strategic orientations 2011 milestones • 55% of branch network in 1 • Achieve loan volume low potential areas (vs. Modernize the branch network growth in line with 45% for co
Slide 26: Modernize the branch network through footprint optimization
1 Modernize the branch network through footprint Retail Strategy optimization and introduction of new branch model … with new formats and reaffirmed Branch network footprint will be optimized… integration to Crédit Agricole Group • Relocation of 30 branches: Higher quality catchment • New branch mod
Slide 27: Value existing customer base and adapt product offer
2 Value existing customer base, defining priority Retail Strategy customer segments and adapting product offer Small Businesses & Professionals segment Individual segment priorities priorities Current & target individual segmentation Current & target SB&P segmentation - In % of total customer base -
Slide 28: Improve sales staff productivity
3 Improve sales staff productivity through training, Retail Strategy specialization and knowledge certification Training and Knowledge Increasing sales productivity coaching certification Number of products per active customer 3 2.2 2 1.9 1.6 1.4 100% of sales advisors 100% of sales advisors 1 2008
Slide 29: Restore commercial performance: CIB and SMEs
Restore commercial performance SME and CIB Strategy Corporate & Investment Banking (CIB) and SMEs Current situation Key strategic orientations 2011 milestones • 2,500 SME customers 1 • Loans volume growth served by dedicated aligned with market business centers SME: Greater integration in evolution
Slide 30: On SME segment, client-oriented approach
1 On SME segment, Emporiki will emphasize a SME Strategy client-oriented approach 2009 focused on consolidation, risk 2010 – 2013: Refocus on commercial management and margins rebuilding effort and sales effectiveness • Completed full transfer of SME coverage to • Leverage synergies with CIB to deep
Slide 31: CIB to become privileged banking partner of large corporates
2 CIB will leverage its unique positioning to become the CIB Strategy privileged banking partner of large corporates A unique positioning in the Greek market Supported by the A local lender expertise of an close to its customers international player • Build on recent expansion of client base to • Le
Slide 32: Emporiki Bank – Outstanding loans and deposits
Commercial Emporiki Bank – Outstanding loans and deposits Strategy Emporiki bank solo gross outstanding loans CAGR ‘08-‘13 Comments €40B +7% CAGR ‘08-‘11 31 30 +5% 26 CIB • Emporiki expected to hold to its 22.6 overall market share level of 20 19.0 SME 2009 of 9.5% on loans SBL 10 Individuals 0 2007
Slide 33: Emporiki Bank – Net Banking Income
Commercial Emporiki Bank – Net Banking Income Strategy Comments Emporiki bank solo NBI CAGR • Progressive recovery from a low €1,200M ‘08-‘13 point in first quarter 2009 affected +10% >1,100 by economic crisis CAGR 1,000 ‘08-‘11 886 +5% >800 • Growth supported by Interest and 800 commission based re
Slide 34: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 34
Slide 35: Redefine Human Resources management
HR Redefine Human Resources management Strategy Current situation Key strategic orientations 2011 milestones 1 • Inadequate Performance • 100% of employees through appraisal, not covering the Increase the skill set of appropriate training management team employees through a programs comprehensive tr
Slide 36: Comprehensive training programs to increase staff skill set
1 Comprehensive training programs are planned to increase HR Strategy the skill set of Emporiki staff Training Key figures and objectives • Designed around corporate strategy, • €2M/year additional training budget cultural priorities and business needs starting 2009 • 2009/2010 training plan to incl
Slide 37: New performance appraisal system
2 Commitment to instill a performance driven culture HR Strategy through the new performance appraisal system New Performance Appraisal System Key changes and benefits • Assessment of individual performance, professional competencies and job- specific skills • Coverage of the entire organization inc
Slide 38: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 38
Slide 39: Emporiki Group structure and key strategic orientations
Emporiki Group structure and key strategic orientations Emporiki Group structure (June 2009) Key strategic orientations Market (Other shareholders) 82.5% stake* 13% stake • International subsidiaries: - Continue to fulfill Emporiki Greek corporate customer needs abroad, leveraging synergies with Gre
Slide 40: International Subsidiaries: Stabilize operations to break even by 2011
International Subsidiaries: Stabilize operations to break even by 2011 Net banking income • Emporiki had an international presence at the end International subsidiaries of 2008 of 12 branches in Cyprus and 76 branches in other South Eastern European countries NBI International subsidiaries (Albania,
Slide 41: Agenda
Agenda • Emporiki Bank Vision and Strategy - Risk monitoring - Cost optimization - Business perspective - Human resources re-foundation • Emporiki Group within Crédit Agricole S.A. • Key financials and milestones 41
Slide 42: Emporiki Group Consolidated P&L Highlights
Emporiki Group Consolidated P&L Highlights Group Net Banking Income Group Profit before Tax Group Net Banking Income Group Profit before tax (€M) (€M) CAGR ‘08-‘13 €400M Emporiki to break >300 1,500 +12% >1,200 even in 2011 CAGR >200 1,250 ‘08-‘11 200 +7% 1,000 919* 34* >0 approx. >850 0 750 723* 73
Slide 43: Emporiki Group needs to strengthen its equity to fund this plan
Emporiki Group needs to strengthen its equity to fund this plan and meet the capital ratios • A Tier 1 injection of around 1 billion EUR - Sufficient to cover the needs for 2010 and 2011 (losses and growth of risk weighted assets) - Targeting a 8 % Tier 1 ratio - Without any equity from the Greek ba
Slide 44: Emporiki recent financial trajectory show first signs of recovery
Emporiki recent financial trajectory show first signs of recovery • Emporiki has started to progressively NBI recover over Q2 and Q3 2009 Emporiki bank solo quarterly NBI €250M 222 approx. 200 171 176 190 • Significant provisions are still posted 150 146 136 in 2009, explained by the instable 100 ec
Slide 45: Three milestones between now and 2013 to transform Emporiki
Three milestones between now and 2013 to transform Emporiki 3 Re-found Emporiki that takes its share of Greek market potential 2 Secure Emporiki financial trajectory 1 Mobilize the bank By 2013… around a Transformation By end of • Emporiki is on a profitable roadmap 2011 growth path • New commercial